Do You Have a Home Loan? Know Why Term Insurance is Right for You?

Although, it is not necessary to buy any kind of insurance at the time of securing a home loan for yourself, yet it is wise to go for a term plan for home loan in the event of unforeseen death of the policyholder, wherein their family members may have to go through serious financial crisis and may even require to give up on the home in order to pay off the debt. This sis the reason why it is significant to secure the property and ones’ loved ones by investing in a term insurance plan for the protection of home loan in order to hedge against such events.

Ideally, an individual must choose a term plan for a home loan wherein the sum assured is equal to 10 times of the yearly income along with the amount of loan to be paid.

• A Term Plan is Affordable

At the time of securing a home loan, your loan lender may insist you upon buying a term insurance for the protection of the home loan in order to protect the investment, wherein the insurance provider may pay off any outstanding sum owed to the loan provider. As this is not necessary, you can instead choose to go for a term plan that works way better than a home loan protection cover.

• Term Insurance Offers Fixed Benefits

One of the major benefits offered by a term insurance plan for protection of home loan is that the beneficiary is entitled to get the complete sum irrespective of when the claim is being made. This amount can be utilized to pay off the loan provider and the leftover amount can be retained by the beneficiary.

Must read: Benefits of Buying Rs. 1 Crore Term Insurance    

• Ease in Change of Loan Providers with a Term insurance Plan

When we talk about term insurance plans for home loans, one can easily shift  their existing home loan from one loan provider to another without needing to let go of the premium payable. Moreover, even after completing the loan payment, you and your family members can still avail the life insurance offered by term insurance by paying the premiums or you can also choose to opt out of the same.

At times, a bank itself may offer you a term insurance plan. The insurance premium paid by the bank may be high as compared to other insurance companies, as insurance is a third party offering and the banks primarily may have to buy it on behalf of the life assured. This means that there may be commission involved as well. Therefore, it is suggested for the investors to do a comparison of term insurance plans provided by banks with the availability of premiums online.

Also read: 

Pros and Cons of Buying a Term Insurance Plan

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.